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Oprah has a daily budget of 20 to spend on fruit & vegetables (x) and meat (Y). Fruit & vegetables are priced at 1 while

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Oprah has a daily budget of 20 to spend on fruit & vegetables (x) and meat (Y). Fruit & vegetables are priced at 1 while meat is sold at 4 per unit. Her utility function is U(X,Y) = 5x+Y, where MUx = @)* and Muy = 4 , MUY (3) (a) Explain how Oprah's tastes over fruit & vegetables and meat can be translated into indifference curves. Sketch some of these in a diagram with X on the horizontal axis and Y on the vertical axis. What determines their slope? [5 marks] (b) Find Oprah's optimal consumption decision and indicate it in your diagram. What is Oprah's utility from her chosen bundle? [7 marks) (c) The government launches a '5 a day' campaign recommending that people eat 5 portions of fruit & vegetables every day. Will Oprah follow the government's advice? Explain why, or why not. If not, can Oprah be incentivised to do so? [10 marks] (d) Oprah's friend Meghan recommends a vegan diet. Will Oprah follow Meghan's advice? Explain why, or why not. If not, can Oprah be incentivised to do so? [8 marks] Oprah has a daily budget of 20 to spend on fruit & vegetables (x) and meat (Y). Fruit & vegetables are priced at 1 while meat is sold at 4 per unit. Her utility function is U(X,Y) = 5x+Y, where MUx = @)* and Muy = 4 , MUY (3) (a) Explain how Oprah's tastes over fruit & vegetables and meat can be translated into indifference curves. Sketch some of these in a diagram with X on the horizontal axis and Y on the vertical axis. What determines their slope? [5 marks] (b) Find Oprah's optimal consumption decision and indicate it in your diagram. What is Oprah's utility from her chosen bundle? [7 marks) (c) The government launches a '5 a day' campaign recommending that people eat 5 portions of fruit & vegetables every day. Will Oprah follow the government's advice? Explain why, or why not. If not, can Oprah be incentivised to do so? [10 marks] (d) Oprah's friend Meghan recommends a vegan diet. Will Oprah follow Meghan's advice? Explain why, or why not. If not, can Oprah be incentivised to do so? [8 marks]

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